BEC Mnemonics Flashcards
What are the three objectives within the COSO Internal Control Framework and what do they aim to achieve?
ORC
- Operation Objectives - relates to the EFFECTIVENESS and EFFICIENCY of entities operations.
- Reporting Objectives - relate the reliability, timeliness, and transparency of entity’s external and internal reporting
- Compliance Objectives - make sure the entity is complying with laws and regulations
What are the principles that make up Control Environment?
EBOCA
E - Ethical Values and Integrity
B - Board Independence and Oversight
O - Organizational Structure
C - Commitment to Competence
A - Accountability
What are the principles that make up Risk Assessment?
SICI
S - Specify objectives
I - Identify and analyze risks
C - Consider the potential for fraud
I - Identify and and assess change
What are the principles that make up Information and Communication?
OIE
O - Obtain and use information
I - Internally communicate information
E - Externally communicate information
What are the principles that make up Monitoring?
SOC
S - Separate and/or Ongoing evaluations
C - Communication of deficiencies
What are the principles that make up Existing Controls?
SSD
S - Select and develop control activities
S - Select and develop technology controls
D - Deploy through policies and procedures
What are the components of Enterprise Risk Management?
GO PRO
G - Governance and Culture
O - Objective and Strategy-Setting
P - Performance
R - Review and Revision
O - Ongoing information, communication, and reporting
What are the principles that make up Governance and Culture?
DEEAD
D - Defines Desired Culture
E - Exercises board oversight
E - Establishes operating structure
A - Attracts, develops, and retains competent employees
D - Demonstrates commitment to core values
What are the principles that make up Objective and Strategy-setting Culture?
FADE
F - Formulates business objectives
A - Analyzes business context
D - Defines risk appetite
E - Evaluates alternative strategies
What are the principles that make up Performance?
I PAID
I - Identify risks
P - Prioritize risks
A - Assess severity of risk
I - Implement risk response
D - Develop portfolio review
What are the principles that make up Review and Revision?
APR
A - Assess substantial change
P - Pursue improvement in ERM
R - Review risk and performance
What are the principles that make up Ongoing information, communication, and reporting?
LCR
L - Leverages IT
C - Communicates risk information
R - Reports on risk, culture, and performance
What are the types of risk responses?
RAAPS
R - Reduce risk by hedging
A - Accept (no action is taken
A - Avoid (leaving line of business)
P - Pursue
S - Share (outsourcing and buying insurance)
What are the components of SCOR model?
Plan, source, make and deliver
What are some examples of carrying costs?
Storage costs, insurance costs, opportunity costs, lost inventory due to obsolescence or spoilage
In essence, it is the cost of having inventory
What are prime and conversion costs?
Prime costs = Direct Labor + Direct Materials
Conversion Costs = Direct Labor + OH
Product Costs vs Period Costs vs Manufacturing Costs
Product Costs are all costs related to the manufacture of the product (capitalized as inventory till they are sold). Made of DM DL and Manufacturing OH
Period Costs are expensed in the period in which they are incurred. SG&A, Depreciation,
Manufacturing costs also known as Manu. OH, are made up of DM DL and indirect costs (IL IM Factory costs)
What are the measuring costs objects/objectives?
PIE
Product Costing
Income Determination
Efficiency Measurements
What are the steps in allocated Overhead using the traditional approach?
Step 1: Calculate OH rate = Budgeted OH Costs/Estimated Cost Driver
Step 2: Actual Cost Driver * Step 1
What are the economic indicators and what do they measure?
LLC
Leading: predict economics activity
Lagging: follow economic activity (after the fact)
Coincident: provide information about the current state of the economy
What are the four types of Markets?
MMOP
Monopolistic Competition - many sellers compete to sell a differentiated product
Monopoly - concentration of supply in the hands of single firm
Oligopoly - few sellers dominate the sales of a product and high entry barrier
Perfect Competition - no individual firm can influence the market price or supply
What are Porters Five Forces
BBB (big baller brand) ME
B - Barriers to Entry
B - Bargaining Power of Customers
B - Bargaining Power of Suppliers
M - Market Competitiveness
E - Existence of Substitute Products
What are the types of business combinations
Horizontal - companies in the same industry join together under single management l
Vertical - combination of companies at different stages of production process
Circular - different business units with remotes connections join under single management
Diagonal - company joins with other company who provides ancillary support for the other companies primary activity
What are the two broad categories risks can be classified to?
DUNS
Diversifiable
Unsystematic (think firm specific)
Non-diversifiable
Systematic (think market)
